West Haven faces fines for long audit delay

By Abbe Smith, Register Staff
07/16/2008

WEST HAVEN — Stern warnings from the state and the threat of hefty fines were not enough to get the city on track with its long overdue 2006-07 audit, which remains incomplete after Tuesday’s deadline expired.

The state Office of Policy and Management has not decided whether to impose fines against the financially strapped city, as it vowed to do in a letter dated June 13 if the deadline was not met.

“No decision has been made about their failure today to provide the audit in the time that we require,” said OPM spokesman Jeffrey Beckham. He said OPM is in discussions with the city and will make a decision soon about whether to impose a fine.

The civil penalty for missing the deadline could cost the city anywhere from $1,000 to $10,000.

Mayor John M. Picard said the city was expected to hand over all its audit materials to the city’s independent auditor by late Tuesday. That auditor, McGladrey & Pullen, must conduct a two-week review of the materials and then complete its analysis.

Still, Picard said Tuesday he was confident the state would be satisfied with the progress the city has made on the audit and would not impose a fine.

The mayor said the city’s financial picture is improving and he predicted the $14.4 million operating budget deficit will be reduced by at least $500,000.

“This is my frustration with OPM, I don’t need to see this audit to see that we are paying down our debt and reducing our deficit,” he said.

This latest showdown with the state comes less than three months after the state announced plans to possibly take over the city’s finances to ward off a potential “cash flow crisis.” Ultimately, the state decided to allow West Haven to deal with its own finances, but OPM Secretary Robert L. Genuario left open the possibility that if financial conditions in the city worsen, a state takeover is still an option.

Genuario’s June 13 letter complained that the city’s six audit deadline extensions are preventing the completion of the state audit of the city’s expenditure of state grant funds. The audit delay also is holding up the completion of the three West Haven fire districts’ audits.

City Councilwoman Nancy R. Rossi, who also heads the council’s finance committee, called on OPM to consider the already burdened taxpayers before deciding whether to impose a fine.

“I am hopeful that OPM won’t take this out on the taxpayers of the city of West Haven,” she said.

Councilman Edward M. O’Brien, D-At large, echoed Rossi’s concerns about not fining the taxpayers for the city’s mistakes. He questioned why Finance Director Robert Barron was not able to get the audit done in time and suggested that the city could have hired extra help to complete the task.

Barron and Picard have blamed this year’s audit delays on multiple factors, including past staffing shortages in the city’s and Board of Education’s finance offices and difficulties with the tax collection software.

The 2005-06 audit, which revealed the city’s $14.4 million deficit, took an extra eight months to complete. Instead of coming out in December 2006, the audit report was released in September 2007. Picard said he expects the 2007-08 audit to be finished on time.

Abbe Smith can be reached at asmith@nhregister.com, or 789-5615.

©New Haven Register 2008